Council forecasts huge coronavirus ‘black hole’ in finances – down from earlier estimates but still £20m

The council has forecast a financial hole of almost £20 million in its budget this year because of the coronavirus response.

Brighton and Hove City Council has had to spend millions of pounds more than expected as a result of the pandemic but has also suffered lost income from things like parking charges.

The financial projection is better though than the worst-case scenario set out just a few months ago by the council’s finance chief Nigel Manvell.

In July the council faced the prospect of a £49 million hole in its budget, especially with rising bills for adult social care and personal protective equipment (PPE).

Costs were going up as income was shrinking from council tax receipts, business rates, rents, parking charges and fees for events – all related to the response to the covid-19 pandemic.

The council has received almost £19 million from the government’s emergency response grant fund and a further £15 million of government money is expected. This should cover about 75 per cent of the losses on sales, fees and charges.

Total extra government funding so far has come to £33.5 million, which is £7.5 million more than earlier budget projections.

And the post-lockdown recovery had resulted in a £4 million improvement in income, Mr Manvell said.

At a “virtual” meeting of the council’s Policy and Resources Committee on Thursday (8 October) councillors agreed to use up to £20 million – from reserves of £50 million – for “financial smoothing”.

But what the council takes out of its reserves now will need to be paid back in the future.

The council had contemplated holding an emergency budget to work out what spending to cut while also deciding how much to take from reserves but so far this has not proved necessary.

Green councillor David Gibson, the council’s joint finance lead, said that the financial smoothing approach was not raiding reserves and “kicking the can down the road” because the reserves would be replenished.

Councillor Gibson said: “I believe this very much makes sense because, as a result of the economic damage caused by covid, we are facing potentially the worst recession ever – certainly a massive hit that has knocked the city sideways.

“Reserves are for a rainy day – and frankly we’re experiencing a thunderstorm at the moment so it is the right time to use them.”

Labour councillor Daniel Yates said that he was pleased to see signs of recovery but had concerns about the effect on tourism when there was a risk of a second lockdown – locally or nationally.

He said: “I’m not really convinced we can necessarily have any level certainty about tourism, certainly over the next eight months.

“Looking forward to next summer as well, I am very uncertain and unclear about what the tourism industry will be – as they are.”

Mr Manvell said that the financial projections took into account the potentially large grant expected from the government to cover lost income.

  1. Valerie Reply

    In past years there were many calls from cllrs to use Reserves to boost front line services. Thank God they were resisted. While some other councils are already declaring bankrupty and BHCC is still viable.

  2. Peter Reuben Reply

    Massive electoral reform is needed. The system of voting people in who are then responsible for implementing decisions on such large sums of money is totally wrong.
    They’ve left Madeira Drive closed and lost thousands in revenue. They’ve implemented cycle lanes that have caused congestion, pollution, bus delays, emergency vehicle delays and massive damage to local businesses. Incompetent is too good a word for these ‘councillors’

    • Christopher Hawtree Reply

      So what are your proposals for “reform”?

      • Peter Reuben Reply

        It’s very simple really. The very first thing I would do would be to introduce a competency, common sense and Business assessment test for anyone standing to be a councillor. That would probably eliminate about 90% of the current ones.

        • Christopher Hawtree Reply

          That is so much pub talk. It is not down to you to introduce uch a thing – even it iwere quantifiable – but the Government. That sdaid, America could do with a President who shows them

          • Peter Reuben

            How about just a plain IQ test for all politicians to establish their level of intelligence – with a minimum required score of 110 and above – any idiot can currently stand for election as a councillor and as we’ve seen in Brighton and Hove, it’s crystal clear that many of them are just that.

  3. Christopher Hawtree Reply

    If you really think that – which comes close to a race of Supermen -, then you should be campaigning nationally for it rather than sounding off in a comments slot. It is curious to recall that women in France only got the Vote after the War.

    • Peter Reuben Reply

      so you condone idiots being elected as councillors then… or MP’s?
      We deserve to have the best and most competent people in these roles… currently we have the opposite, voted in with impunity by the likes of you?

      • Mel Reply

        What part of one’s brain needs to be missing, in order to secure a job running the current Brighton & Hove Council? And how much of ratepayer’s money did those cretins squander on the extra wide, useless, pointless, ansd often dangerous cycle lanes, which still have the notice stating that they are “temporary”? Has no one explained the meaning of the word to any of them yet?

  4. Rolivan Reply

    If tbey have had £50m in reserve why have they not used some of this for The Madeira Terraces which would have a two fold effect on Council Purse strings.The first being that it would keep ever increasing costs from making a sound business case and the second being it will provide an income stream to pay for future maintenance and funds for that whole area to be redeveloped.

  5. Hendra Reply

    The Greens / Momentum Labour cllrs have not acted in the best interests of the taxpayers. They need removing immediately

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